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Choosing energy in deregulated markets

The following guest post is written by Kristina Ross, Blogger at SaveOnEnergy.com, a site that helps homeowners (and commercial customers) in deregulated energy markets compare rates and options.

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“Deregulation” – it’s a term you’ve heard thrown around a million times in regulatory and political circles. In and about the energy industry, the deregulation discussion is picking up steam particularly quickly. That’s much in part due to the fact that states such as Texas and New York continue to implement policy changes that hinge on the deregulation of electricity and natural gas.

At its simplest, the idea behind energy deregulation is to give the customer a greater breadth of choice. Before the mid-90s, a consumer’s electricity and natural gas service was most often handled by the local utility company and local utility company alone. These days, in states that are deregulated or partially deregulated, the utility company still delivers your electricity and natural gas. However, there are a multitude of energy suppliers who actually sell you those two commodities. The supplier is who typically sends you a bill in the mail, but the utility is who you call if your power goes out. Suppliers handle your supply (easy enough?); utilities handle the logistics.

With that out of the way, it’s fair of you to wonder how deregulation affects your home or business directly. If you live in a deregulated area, here’s what you need to know:

There are many energy suppliers out there. It’d be foolish if you didn’t shop around a bit and read up on your options. Some suppliers have been in the business longer than others; some may have a larger, more satisfied customer base. Do your research before you sign any contracts.

Energy packages come in all shapes in sizes. Maybe you’re used to checking the box and moving along with whatever default plan you’re given. Rest assured, that’s not the smartest move when you live in a deregulated market. Are you looking for a fixed rate plan or a variable rate plan? How often do you want to be billed? Are you interested in incorporating green energy into your package? These are all questions you need to ask yourself before you make your choice.

Contract terms can vary quite a bit. Some plans operate on a month-to-month basis, while others can extend out to even five years. Think about what makes the most sense for your situation. And remember, if you end up moving or switching your supplier, some companies will charge you a fee for ducking out of your contract early.

Opinions vary on energy deregulation nationwide. While some experts point to the relative success of deregulation within the airline and communications industries, others question its ability to actually drive down energy costs. Wherever your opinion falls, there’s no doubt that deregulation is giving customers more options when it comes to their electricity and natural gas services. If you’re part of a deregulated market, be sure to take advantage of your power to choose.